Managing Editor’s Note: Today, we’re handing it over to colleague Larry Benedict – a market wizard and legendary hedge fund manager.

Larry has been on a streak at his entry-level advisory, One Ticker Trader. It’s where he keeps things simple and trades just one ticker every month.

And simple works… His last five trades have been winners. Folks who followed Larry’s recommendations have had the chance to rack up gains of 24.8%, 22.4%, 88.8%, 66.7%, and 100%. And four of those trades took place in about a week.

How does Larry do it?

Our editorial director, Chris Lowe, sat down with Larry to find out. It’s all in the Q&A below.

Larry reveals how he began using the one-ticker strategy in his own career… why it’s so powerful… and how he’s used it to deliver a string of double-digit gains for his subscribers.

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Chris: So, Larry, can you tell us what it was like when you first entered the trading world?

Larry: Sure. At the start of my career, I was trying to trade every stock.

This was the mid-1980s. And I was a floor trader at the Chicago Board Options Exchange (CBOE).

This was before electronic trading. Back then, if you wanted to be a trader, you had to have a “seat” on the exchange floor.

No one was sitting, but having a seat meant owning the right to trade on the floor of the exchange.

And I had a Midwest seat, which was a cheap way of getting on the exchange. It cost me just $10,000 a year.

We didn’t even have computers. We were handing in tickets into a kind of conveyor belt when we were trading. That’s how the exchange tracked the trades we were making.

I was trading options on a bunch of different stocks. One day, I was trading Chrysler Motors. The next day I was trading Revlon, and then Litton Industries, which was a large defense contractor at the time. Just a bunch of different names.

That was hard because I wasn’t a specialist in these stocks. I was more of a global macro guy. I just wanted to know if the market was going to go up or down.

The hot stock back then was IBM. It was like Nvidia is today. Everyone traded it because it was the market mover. I also traded IBM a lot. And it was a terrible strategy.

I would be bullish on the market, so I would buy IBM to profit as it went higher. But often, IBM would go down as the market went up. It caused me a lot of aggravation because I would be right about the market and still lose money.

Eventually, I got sick of this happening. So I changed my focus from trading IBM and other stocks to trading the Dow, the S&P 500, and other stock market indexes. That way, I only had to get one thing right. If the market was up, it was up. And I made money.

That was an important breakthrough. I was good at reading the fundamental clues about where the market was headed. Trading the indexes directly allowed me to be right a lot more. I didn’t have to figure out which way the market was headed and then figure out how individual stocks would trade relative to the market.

Chris: Is that why you launched One Ticker Trader? To have this simplified entry-level way of trading?

Larry: Exactly. A big problem for new traders is they’re all over the board. They’re long this, they’re long that. They’re short this, they’re short that. Their trading plan is far too complex.

That not only makes it hard to consistently pick winners – it’s hard to control your risk. And as my subscribers know, controlling risk is my No. 1 priority.

Doing what I did back in my early days as a trader and focusing on trading a few indexes instead is a better way to go.

At One Ticker Trader, we pick one ticker to trade each month. That could be an exchange-traded fund (ETF) that tracks the S&P 500, the Dow, or the Nasdaq. We’ve also traded an oil ETF. We’ve even traded Tesla (TSLA).

I usually like to pick an outlier. Something that interests me that month.

Chris: When you say “an outlier,” do you mean it hasn’t caught up with a rally, or it’s rallying when everything is going down?

Larry: Yeah. Take the trade on the SPDR Dow Jones Industrial Average ETF Trust (DIA) that I recommended to One Ticker Trader subscribers on May 30. It’s a way to trade moves in the Dow.

Some folks think the major indexes all behave the same way. But that’s a misconception.

If the Nasdaq is rallying strongly, for example, it doesn’t necessarily mean that the Dow and S&P 500 are doing the same. Often, one index gets left behind… just like this year.

When I placed that trade, the Nasdaq was up 11.5% for 2024, and the S&P 500 was 9.8% higher. But the Dow was up just 1.1% for the year.

These situations grab my attention because they offer great trading opportunities. The Dow’s lag versus the Nasdaq and S&P 500 left it primed to revert to the mean and catch up.

That’s just a fancy way of saying what’s out of whack goes back to something more normal. It’s just a matter of time.

And that’s what happened. The day after I recommended an options trade on DIA, the Nasdaq lost -0.2% and the S&P 500 gained just 0.8%.

But the Dow rallied 1.6%. And it opened higher the following trading session, too.

Thanks to the leverage that options give us, we closed out half our position for a 55% profit. And I closed the second half of the trade a day later for a 74% gain. So that’s a 66.7% blended gain in just four trading days.

And it wasn’t the only big win I’ve scored for my subscribers on the DIA trade. On June 20, I closed out another trade on the same ticker for a 100% gain.

And that’s not a 100% gain in a year. That trade lasted just four trading days as well.

This is where my trading strategy is different from many others.

I sometimes trade individual stocks. But trading indexes – and the relationships between different indexes – has been a cornerstone of my career.

I know it’s not a fancy strategy. But I love its simplicity. And it works. My performance with these kinds of trades is one of the reasons Barron’s ranked my hedge fund in the top 1% in 2008, 2009, and 2010.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict